Closing Stock Market Summary
The stock market started the new week on an upbeat note. The major indices were all trading higher thanks to some buy-the-dip action following recent declines, which was helped by a sense of relief that Iran's attacks on Israel didn't result in any economic damage.
Initial buyer enthusiasm started to fade, however, shortly after the market opened. There was no specific news catalyst coinciding with the early deterioration that was likely driven by continued consolidation efforts. Selling picked up steam, though, in the afternoon trade following reports that Israel's Chief of Staff said "there will be a response" to Iran's attack on Israel.
The major indices ultimately settled at or near their worst levels of the session. The S&P 500, which dropped below 5,100 and its 50-day moving average (5,114), declined 1.2% today.
Geopolitical worries were not the only factor fueling the afternoon selling. Defense-related stocks didn't react much to the afternoon reports related to the Middle East. Lockheed Martin (LMT 453.08, +2.68, +0.6%), RTX (RTX 100.02, -0.08, -0.1%), and others were outperforming before the new developments. RTX slid below its prior close late in the session, settling near its low of the day.
Also, Treasury yields remain elevated, indicating that there wasn't a strong safe-haven trade in the Treasury market. The jump in market rates itself acted as a contributing factor to the afternoon pullback. The 2-yr note yield settled six basis points higher at 4.94% and the 10-yr note yield jumped 13 basis points to 4.63%.
The outsized impact of weakness in mega cap stocks and chipmakers also contributed to the index level deterioration. The Vanguard Mega Cap Growth ETF (MGK) fell 1.9% and the PHLX Semiconductor Index (SOX) logged a 1.4% loss.
All 11 S&P 500 sectors registered decline, reflecting a broad retreat. The financials sector logged a 0.5% decline despite sizable earnings-related gains in Goldman Sachs (GS 400.88, +11.39, +2.9%), M&T Bank (MTB 140.94, +6.38, +4.7%), and Charles Schwab (SCHW 71.23, +1.20, +1.7%).
- S&P 500:+6.1% YTD
- Nasdaq Composite: +5.8% YTD
- S&P Midcap 400: +3.1% YTD
- Dow Jones Industrial Average: +0.1% YTD
- Russell 2000: -2.5% YTD
Reviewing today's economic data:
- March Retail Sales 0.7% (consensus 0.4%); Prior was revised to 0.9% from 0.6%; March Retail Sales ex-auto 1.1% (consensus 0.5%); Prior was revised to 0.6% from 0.3%
- The key takeaway from the report is that the U.S. consumer, fortified by a strong job market, continued to spend freely in March in an act that will continue to support the soft landing/no landing outlook for the U.S. economy.
- April NY Fed Empire State Manufacturing -14.3 (Bconsensus -6.0); Prior -20.9
- February Business Inventories 0.4% (consensus 0.3%); Prior 0.0%
- April NAHB Housing Market Index 51 (consensus 51); Prior 51
Separately, Tuesday's economic calendar features:
- 8:30 ET: March Housing Starts (consensus 1.485 mln; prior 1.521 mln) and Building Permits (consensus 1.518 mln; prior 1.518 mln)
- 9:15 ET: March Industrial Production (consensus 0.4%; prior 0.1%) and Capacity Utilization (consensus 78.6%; prior 78.3%)